Decommissioning Insight 2018

are expected to be decommissioned in the North Sea over the next ten years

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4 UK Performance Indicators

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In Summary P rojections of decommissioning expenditure over the next decade have been assessed using the industry’s standard WBS. Expenditure is expected to be lower across all the elements of the WBS, with reductions of up to 29 per cent in removals and 19 per cent in well decommissioning over the period. Whilst the re-phasing of activity has an impact, some of the forecast reduction is also driven by improved cost estimates based on better knowledge of the scope and are reflective of recent improvements in performance. This becomes clear when examining the average costs for individual activities presented by operators in this year’s data submission. In particular, the average forecast cost to decommission a well is falling across the North Sea. This reduction reflects the efficiencies that have been realised during well decommissioning projects over the last two years, with some individual operators reporting savings of 16 to 17 days per well between the start and end of a project. Reductions in the average cost per tonne to remove are also visible in the topsides and substructure forecasts. There is a 13 per cent reduction in the removal costs per tonne for topsides in the central and northern North Sea and a 16 per cent reduction in removal costs per tonne of substructure in the same region. Industry is beginning to track this success. Results show that project experience is feeding future estimates, leading to reductions, and driving towards delivery of the 35 per cent reduction target for decommissioning by 2035. Subsea infrastructure removal accounts for 11.3 p r cent of forecast expe diture During 2017, the number of wells decommissioned rose above wells drilled for the first time 8% 5,724 km of pipelines are slated for decommissi ning by 2027 in UKCS Decommissioning accounted for around 8 per cent of overall UKCS oil & gas industry expenditure in 2018 Unit well costs continue t fall across all areas of the North Sea Decommissioning will open new markets for the UK supply chain, a key component of of dec mmissioning xp nditure across the top 12 markets will be spent in the UKCS billi n is forecast to be spen on decommissioning in the UKCS by 2027 8% 48% of UK expenditure is in the central North S a billion is forecast to be spent on decommissioning in the UKCS by 2027 An average billion will be spent per year on the UKCS up to 2027

The UK is the largest global market for commissioning spend over the next decade

Unit well costs continue to fall across all areas of the North Sea An average

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cost billion will be spent per year on the UKCS up to 2027

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#1 OGA target reduction in decommissioning expenditure by 2035 against a 2016 baseline Decommissioning on the UKCS offers first-mover advantage for the UK supply chain 48% of UK expenditure is in the central North Sea 35% 203 fields in the UKCS are to undergo decommissioning activity over next decade 49% Well decommissioning is the source of greatest cost, with

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379 ells

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pected to be missioned in rth Sea over xt ten years mmissioning diture across p 12 markets l be spent the UKCS